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Treasuries Extend Recent Move To The Downside

Treasuries moved significantly lower over the course of the trading day on Friday, extending the downward move seen over the two previous sessions.

After coming under pressure early in the session, bond prices saw some further downside late in the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.4 basis points to 2.755 percent.

With the continued increase on the day, the ten-year yield ended the session at its highest closing level in over a month.

Optimism about U.S.-China trade talks continued to reduce the appeal of safe havens such as bonds following upbeat comments from White House economic adviser Larry Kudlow.

Kudlow said the U.S. and China are making "fantastic" progress in their trade negotiations, suggesting the world's two largest economies are on the cusp of an "historic" agreement.

Meanwhile, traders largely shrugged off some disappointing economic data including a report from the Institute for Supply Management showing growth in the U.S. manufacturing sector slowed by much more than anticipated in the month of February.

The ISM said its purchasing managers index dropped to 54.2 in February after climbing to 56.6 in January. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to edge down to 55.5.

"Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

A separate report from the Commerce Department showed personal income edged slightly lower in the month of January after jumping much more than expected in December.

The report said personal income dipped by 0.1 percent in January after surging up by 1.0 percent in December and rising by an upwardly revised 0.3 percent in November.

Economists had expected income to climb by 0.4 percent in December compared to the 0.2 percent uptick originally reported for the previous month.

The Commerce Department noted the report combines estimates on income in January and December due to the recent partial government shutdown.

However, the report only included readings on personal spending in December as a result of a delay in the release of data on retail sales.

The report said personal spending fell by 0.5 percent in December after climbing by an upwardly revised 0.6 percent in November.

Economists had expected personal spending to drop by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Economic data may move into the spotlight next week, with traders likely to keep a close eye on the Labor Department's monthly jobs report due next Friday.

Reports on construction spending, new home sales, service sector activity, and housing starts are also likely to attract attention along with the Federal Reserve's Beige Book.

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